ADNOC completes ADCO deal with 4% stake to CEFC

Announcement of awarding the remaining 4% stake of the ADCO concession to China's CEFC for $888mn comes a day after ADNOC said it had sold 8% of the share to Chinese giant CNPC

The 4% stake award to China's CEFC completes the 40% share of the ADCO concession ADNOC had reserved for foreign players. (Image courtesy: ADNOC on Twitter).
The 4% stake award to China's CEFC completes the 40% share of the ADCO concession ADNOC had reserved for foreign players. (Image courtesy: ADNOC on Twitter).

The Abu Dhabi National Oil Company (ADNOC) has announced signing an agreement today with the CEFC China Energy Company Limited (CEFC China), awarding it the final 4% share in Abu Dhabi’s onshore oil concession.

CEFC has paid a sign-up bonus of $888mn (AED3.3bn) to enter the concession. The onshore concession is operated by the Abu Dhabi Company for Onshore Petroleum Operations (ADCO).

The agreement, which has a term of 40 years, backdated to January 1, 2015, was signed by Dr Sultan Ahmed Al Jaber, ADNOC group chief executive officer, and member of Abu Dhabi’s Supreme Petroleum Council and Ye Jianming, chairman of the Board of Directors of CEFC China.

The announcement comes just a day after ADNOC said it had awarded the China National Petroleum Corporation (CNPC) an 8% stake in the ADCO concession, in a deal estimated to be worth $1.77bn.

CEFC’s shareholding completes the 40% onshore oil concession stake earmarked for foreign oil and gas companies. CEFC joins BP of the UK (10%), Total of France (10%), China National Petroleum Corporation (CNPC) (8%), Inpex Corporation of Japan (5%), and GS Energy of South Korea (3%) as participants in the onshore concession and shareholders of ADCO. ADNOC retains a majority 60% share in the ADCO concession.

“We are pleased to be entering into this strategic partnership with CEFC China,” Al Jaber said. “This agreement demonstrates the innovative and strategic approach we are bringing to our business partnerships. CEFC will complement the technical strengths of our existing partners and bring a new dynamic with their financial, commercial and investment experience.”

“As ADNOC embarks on implementing its 2030 growth strategy and five-year business plan, we intend to continue to work closely with value-add partners, across the oil and gas value chain, that can contribute world-class technology industry experience and market access,” he added.

CEFC China is among the 10 largest private companies in China and has a focus on energy and financial services.

“This agreement enhances our ability to integrate ADNOC’s onshore oil reserves with our storage facilities in China and Southeast Asia. By building an energy corridor, linking China, the Middle East and Europe, we can connect the Chinese market with the upstream resources of Abu Dhabi and the terminals in Europe,” Jianming said.

CEFC China owns a controlling stake in KazMunayGas International N.V. (KMGI), Kazakhstan’s national oil and gas company, and has energy investments in China, Africa, Europe and the Asia-Pacific Region.

It has built large-scale oil storage bases in China and owns trans-shipment terminals and gas stations in France, Spain, Romania and various countries around the Mediterranean and the Black Sea. It also organises an oil reserve exchange mechanism integrating oil reserves in Europe, the Middle East and China.

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